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Details of Viacom split emerge
Viacom's Moonves discusses life at the 'CBS Co.' and the 'MTV Co.' should the company break up.
June 6, 2005: 4:59 PM EDT
By Krysten Crawford, CNN/Money staff writer
The Viacom co-president tells investors that a separate CBS would be a sleepier company, but 'we're not going to be Con Edison.'
The Viacom co-president tells investors that a separate CBS would be a sleepier company, but 'we're not going to be Con Edison.'
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NEW YORK (CNN/Money) - Leslie Moonves, the co-president of Viacom Inc., said Monday that he thinks the media giant will split in two.

Speaking at a Deutsche Bank Securities investor conference, Moonves hedged only slightly in expressing optimism that the company's board of directors will ratify this month a breakup plan.

"I think it is likely that it will happen but, once again, it ain't over until it's over," said Moonves.

Moonves' comments come just a few days after media analyst Jack Myers said that Viacom honchos were backing off the proposed split. Viacom shares, which rallied after the breakup proposal was made public in March, are back to their pre-announcement levels, indicating investor tepidness toward the deal.

A Viacom spokesman denied the analyst report and Moonves's comments Monday suggested that the breakup is moving forward. "I am guardedly optimistic without going overboard," said Moonves.

The breakup plan would divide Viacom (down $0.12 to $34.05, Research) into two separate, publicly-traded companies in hopes of jumpstarting the companies' stock price after years of consolidation failed to excite investors.

Moonves is on deck to head one company comprised of the CBS and UPN broadcast networks, the Infinity Broadcasting radio unit, outdoor advertising and book publishing.

The idea behind combining these cash-rich assets would be to provide investors with higher dividends and permit stock buybacks.

The other company, to be led by Viacom co-president Tom Freston, would consist of MTV Networks and Paramount Pictures, among other high-growth businesses.

In defending a breakup just five years after Viacom bought CBS Corp. in what was then the largest media merger in history, Moonves said many of the hoped-for business segment combinations have been achieved. For all intents and purposes, Freston and he already operate separately.

"We speak very infrequently" said Moonves of his interaction with Freston. "There is very little business that we do together."

Don't call us 'ConEd'

Moonves said that neither company has a name yet, although internally one is called 'CBS Co.' and the other 'MTV Co.'

Moonves also dismissed Monday the perception that 'CBS Co.,' is about to become as exciting as a giant utility. "We're going to be a very stable company, but we're not going to be Con Edison," said Moonves, referring to the New York City electricity giant.

In a wide-ranging discussion Monday, Moonves talked about other businesses that would fall under the 'CBS Co.' umbrella.

The CBS television network, which just finished the season as the No. 1 primetime network, last week lined up $2.5 billion to $2.6 billion in advertising commitments for the coming season beginning in the fall. That's by far the largest haul expected of any television network, broadcast or cable, in the advance selling season known as the "upfront."

With ABC and Fox also reportedly posting solid gains, Moonves declared the broadcast television industry "alive and healthy" despite predictions of a looming crisis as the Internet, video games and other advertising vehicles develop.

Moonves, however, noted that gains by ABC and CBS during this year's upfront came at the expense of NBC, the once-dominant network whose ratings fell 17 percent in the year since "Friends" ended its blockbuster run.

Moonves said he's been waiting a long time for NBC to stumble. "NBC has been the market leader for a long time," he said. "They didn't replenish their programming...and it gave us an opportunity and we took advantage of that opportunity."

Indeed, media trade publications reported Monday that NBC, which commands among the highest primetime prices, had cut its advertising rates a few percentage points.

Moonves predicted the broadcast television industry would meet the challenges it faces by tapping new revenue streams using wireless, video-on-demand and other wireless technologies. He said he can see the day when consumers pay $1 to watch its "CSI" crime drama when they want and how they want.

"If the advertising model does come down slightly in the future, I think there's available resources to get the money back in other ways," said Moonves.

He also talked about the state of the radio business. Viacom, through its Infinity Broadcasting unit, owns 183 radio stations around the country. Moonves said the company is still looking to shed underperforming stations in smaller markets, but probably not as many as it once planned.

Last week, Infinity Broadcasting caused a dustup when it switched formats -- and fired a handful of on-air personalities as a result -- at one of its New York City stations. Instead of playing oldies, WCBS now plays a random selection of 1,200 hit songs, a move likened to the iPod portable music player. WCBS no longer has a disc jockey.

Moonves said he was surprised by the uproar that ensued. "God, it seemed like we had shot somebody," said Moonves, who noted that a similar format change has already been made in other markets.

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